Small businesses have one special credit to rely on and build a good credit report as well. It’s called a net 20 trade credit, and gives buyers 30 days to make the bill payment after buying the products. The payment history is then reported to credit agencies, and a regular payment cycle can therefore improve credit scores.
Net 30 simply means a credit of thirty days given to a buyer starting from the day invoice is received. Another lengthier form is Net 60, where a sixty day credit is granted. The longer duration credits are obviously meant for buyers with reliable and proven track record.
The net 30 credit also comes with discounts thrown in so that customers can make quick payments. So a 2/10 net 30 remark on the invoice will mean that a two percent discount can be obtained by paying in ten days, or else the entire invoice is to paid in thirty days. Such discount terms for payments are quite common in business.
As a short term credit, Net 30 is a standard practice around the world. The duration can be set by the creditor, and so there can be a Net 15 or Net 25 as well. A customer can open an account for obtaining net 30 trade credits, and then start using it consistently to improve credit scores. The account should also be used for longer durations, rather than using it only once.
Thus Net 30 trade credits offer great benefits to small businesses. They not only get enough time to pay the bills, but also receive discounts for paying earlier, and regular use of this scheme reflects healthily on the credit report as well.